Miss a car payment and find yourself shut down

People all around are experiencing financial hard times and having to make daily decisions about which bills get paid and which get passed on until the next month. Unfortunately if you have bought a car recently missing that payment could find you sitting on the side of the road with a dead hunk of plastic and steel in place of your car.

More and more car dealers and loan agencies are requiring that shut-off switches be installed on vehicles being sold. The idea is that if you miss a payment you’ll first get a number of visual warnings that you missed the payment and if that doesn’t work they flip the switch and your car is suddenly dead in the road.

As personal credit ratings are slipping from “A” to “B” companies manufacturing these devices are having to ramp up production to keep up with the demand

Business is booming for makers of shut-off devices, which turn engines off when car payments are late. Sales at one manufacturer, Littleton, Colorado-based Passtime, are up 33 percent over last year. CEO Stan Schwarz says the company is cranking up production to meet the demand.

“Right now, we are moving about 2,000 units a month into the marketplace,” Schwarz says. “I fully expect by the end of the year we will be up to 14,000 to 15,000 a month,”

These shut-off switches which also include GPS units allow either the car dealers and lending companies to still sell cars to people whose credit situation would normally exclude from buying cars. As well the troubled buyers get a break in that the interest rate charged is lower than regular purchases. That hasn’t stopped the discussions over their value or the talk on the net about how to disable them

Numerous safeguards are built-in, the manufacturers say. The devices won’t shut down the engine while the vehicle is moving, and consumers can extend the car’s operation in an emergency. Contracts spell out that the device is present on the vehicle.

“We have customers sign a disclosure before they get into the car, saying the unit is on the car and how it is going to function,” Schwarz said. “The disclosure form is four or five pages long, and the customer checks off every box.

“If the dealer won’t disclose the unit is on the car, then we won’t do business with that dealer or his lender or finance company,” he said. But the entire system may break apart if dealer doesn’t sell a good vehicle, he added. Some customers simply won’t make the payments if a vehicle doesn’t run reasonably well